FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Application and Approval Process (07/14/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Application and Approval Process (07/14/2025)

b. Application and Approval Process (07/14/2025) i. Initial Contact Prospective applicants must submit an email to the FHA Resource Center at answers@HUD.gov identifying the nonprofit program(s) that the applicant would like to participate in. Prospective applicants must also identify the state where the program activities will take place. ii. Submitting the Preliminary Information The prospective applicant must submit the following information via email to the point of contact: • the nonprofit’s legal name and physical address of the main office; I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 90 Last Revised: 11/26/2025 • the name, phone number, and email address of the Executive Director; • the name, title, phone number, and email address for all staff members requesting system access for application and reporting; • the effective date of the nonprofit’s 501(c)(3) tax-exempt status as reflected in the IRS Letter of Determination; • the nonprofit’s federal Employer Identification Number (EIN); • the FHA nonprofit program(s) for which the nonprofit is seeking approval; • indication of whether or not the nonprofit is an Instrumentality of Government; and • confirmation that the nonprofit has two years of relevant housing experience within the last five years. iii. Eligibility Requirements A Complete Nonprofit Application refers to an application that satisfies all General Application Requirements and all program-specific application requirements for the programs in which the nonprofit seeks approval. In those instances when a nonprofit is applying to more than one program and the program-specific application requirements request duplicate information, the nonprofit is only required to submit this information once. A Complete Nonprofit Application must be submitted and approved in order for a nonprofit to participate in any one of FHA’s nonprofit programs. (A) General Application Requirements Nonprofit applicants must satisfy all of FHA’s general application requirements whether they are applying to one or all of FHA’s nonprofit programs. All certifications within the application must include the following language: WARNING: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001, 1010, 1012; 31 U.S.C. 3729, 3802). (1) IRS Tax-Exempt Status (a) Standard The nonprofit must have an effective date of exemption, as indicated by the IRS Letter of Determination, of at least two years prior to the FHA nonprofit application date. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 91 Last Revised: 11/26/2025 (b) Required Documentation (i) IRS Letter of Determination The nonprofit must submit the IRS Letter of Determination verifying approval under Section 501(c)(3) as exempt from taxation under Section 501(a) of the Internal Revenue Code (IRC) of 1986, as amended. (ii) Employer Identification Number The nonprofit must provide its EIN and any subsidiary organization's EIN. Nonprofits may not assume the name and EIN of another dormant or defunct nonprofit. (iii) Certification The nonprofit must submit a document signed by an authorized representative of the nonprofit certifying the following: • the nonprofit’s approval for tax exemption has not been modified or revoked by the IRS; • the program activities for which the nonprofit seeks FHA approval to participate in are consistent with the activities and purposes for which the IRS granted tax-exempt status; and • the nonprofit has notified the IRS of any substantial and material changes in its character, purpose, or methods of operation. (2) Board of Directors and Employees (a) Standard Voting members of the nonprofit’s Board of Directors must serve in a voluntary capacity and cannot receive compensation for any service they provide in implementing the nonprofit’s Affordable Housing Program (AHP) for which they are seeking HUD approval. Directors may receive reimbursement for expenses. The nonprofit must operate in a manner so that no part of its net earnings is passed on to any individual board member, corporation, or other entity affiliated with a board member. Board members cannot be employees of the nonprofit. The occupational activities and obligations of board members cannot conflict with the work of the nonprofit. It is a conflict of interest for a nonprofit to employ staff who also work for and receive financial benefits from an entity that is providing the nonprofit with services. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 92 Last Revised: 11/26/2025 (b) Required Documentation (i) Voluntary Board Certification The nonprofit must submit a certification signed by an authorized representative of the nonprofit agency confirming that the Board of Directors serves in a voluntary capacity. (ii) Board of Directors Information FHA requires information on the job responsibilities of all board members to ensure that their occupational activities and obligations do not conflict with the work of the nonprofit and for compliance with Ineligible Participants requirements. The nonprofit must provide the following information for each board member: • name, board position, length of board term including expiration, and whether member is permitted to vote; • Social Security Numbers (SSN) for all voting board members; and • name of current employer, job title, nature of business, and job responsibilities. The FHA Nonprofit Leadership Worksheet may be used, but is not required to be used, to comply with this section. (3) Principal Management (a) Definition Principal Management and Staff Members refer to those who direct the activities of the organization and are responsible for organizational finances. This includes, but is not limited to, Executive Director/President or Vice President, Project/Program Director, or similar position. (b) Standard (i) Conflict of Interest Nonprofits must ensure that no conflicts of interest exist between their Boards of Directors, principal management, or any other entities that may participate in operating their AHP. It is a conflict of interest for a nonprofit to employ staff who also work for and receive financial benefits from an entity that is providing the nonprofit with services related to the nonprofit’s Affordable Housing Program (AHP). I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 93 Last Revised: 11/26/2025 (ii) Staff Experience Principal management must have experience in developing and administering housing programs. Hiring of experienced staff does not relieve the nonprofit agency of the Relevant Experience requirements. (c) Required Documentation Nonprofits must provide the following information for principal management to ensure that no conflict-of-interest relationships exist, as well as no sanctions, foreclosures, inappropriate transfers of Real Property, or Business Relationships. FHA will also review the information collected for compliance with the Ineligible Participants requirements and to ensure that principal management have the requisite experience. For each principal management member, the nonprofit must provide: • name and SSN; • job title within the nonprofit, job responsibilities within the nonprofit, and length of time in position; and • relevant former employers, address of former employer, related job responsibilities, and years in position. The FHA Nonprofit Leadership Worksheet may be used, but is not required to be used, to comply with this section. (4) Relevant Experience (a) Definitions Relevant Experience for HUD Homes refers to the acquisition, rehabilitation, and resale or new construction of five Single Family Properties. Relevant Experience for FHA Mortgagor Programs refers to the housing development or property management of Single Family Properties. Relevant Experience for Secondary Financing refers to the experience of operating a mortgage lending program or a Secondary Financing program as evidenced by five transactions. (b) Standard The nonprofit must have a minimum of two years of relevant experience within the last five years. The hiring of experienced staff does not relieve the nonprofit agency of the relevant experience requirements. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 94 Last Revised: 11/26/2025 Exception A nonprofit that does not meet this experience requirement may be able to obtain limited approval if it has at least one year of relevant experience as defined above and one year of other related housing experience. The nonprofit’s “other related housing experience” must demonstrate that the organization has the financial and administrative capacity to finance, purchase, rehabilitate, or resell homes, or provide downpayment assistance to serve Low- to Moderate-Income individuals or families. (c) Required Documentation After the preliminary information has been accepted and the nonprofit is granted permission to complete the application, the nonprofit must submit a brief narrative describing its relevant housing experience. In addition, the nonprofit must provide: • for the FHA Mortgagor and HUD Homes programs, details of past transactions including property address, acquisition date, loan amount, rehabilitation, date sold, and any delinquency. Transactions must span the period of relevant experience; or • for the FHA Secondary Financing program, a list of past first lien mortgage loans and/or secondary financing loans including loan amounts, transaction dates, and addresses of the properties financed. Transactions must span the period of relevant experience. (5) Delegation of Signature Authority Required Documentation The nonprofit must provide organizational resolutions delegating signature authority to sign loan applications and/or sales contracts on behalf of the organization. These resolutions must be signed and dated by the appropriate persons under applicable state law, the Articles of Organization, and other governing documents. (6) Articles of Organization and Bylaws (a) Standard The nonprofit’s mission statement, purpose, or goals stated in the nonprofit’s Articles of Organization and bylaws must be consistent with those submitted in the application. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 95 Last Revised: 11/26/2025 (b) Required Documentation (i) Conformed Copy The nonprofit must submit a Conformed Copy of its Articles of Organization, and bylaws if applicable. These documents must be signed and dated by the appropriate persons under applicable state law. A Conformed Copy is a copy that agrees with the original and all amendments to it. (ii) Written Declaration A Conformed Copy of the Articles of Organization and bylaws must be accompanied by a written declaration signed by an authorized representative of the organization certifying the copy is a complete and accurate copy of the document. As an alternative to the foregoing declaration, an organization may submit a Conformed Copy of its Articles of Organization approved and dated by the appropriate state authority. (7) Quality Control Plan (a) Standard The nonprofit must have a Quality Control (QC) Plan that explains the organization’s internal and external audit and monitoring procedures. (b) Required Documentation The nonprofit must provide a copy of the QC Plan that, at a minimum, includes the following elements: • their system for maintaining records of QC Findings and actions; • the process by which periodic reports that identify deficiencies are provided to senior management; • the process by which prompt corrective measures are taken and documented by senior management, including time frames and any training provided when deficiencies are identified; and • procedures to report any violation of law or regulation, any known false statement, fraud or program abuse to HUD, the HUD Office of Inspector General (OIG) and the appropriate federal, state or local law enforcement agency. Although not required, nonprofit agencies are encouraged to include the following elements in their QC Plan: I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 96 Last Revised: 11/26/2025 • an impartial third-party entity to conduct QC reviews on the nonprofit agencies’ activities; • procedures for expanding the scope of the QC review when fraud or patterns of deficiency may exist; • procedures to identify revisions in FHA guidelines and inform staff of those revisions; and • procedures to hold nonprofit staff accountable for performance failures or errors. (8) Administrative Capacity (a) Standard The nonprofit must demonstrate the capability to develop and carry out its homeownership program, as described in the nonprofit’s AHPP, in a reasonable time frame and a successful manner. Based on the level of administrative capacity, FHA may limit the number of Properties purchased at a discount and Mortgages insured by FHA. (b) Required Documentation The nonprofit must provide a narrative describing its past experience, if any, in acquisition, rehabilitation, property sales, downpayment assistance, Single Family mortgage lending, housing counseling, and administration of a homeownership program or other AHPs. (9) Financial Capacity (a) Standard The nonprofit must have the financial capacity to operate its homeownership program. FHA will assess the nonprofit’s financial stability in terms of cash balances, assets and liabilities, annual expenses, and cash flow from operations. Based on an analysis of submissions, FHA may limit the number of Properties a nonprofit may purchase at a discount and purchase with FHA-insured financing. (b) Required Documentation Documentation requirements differ based on the amount of a nonprofit’s expended federal award, as defined by the Office of Management and Budget. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 97 Last Revised: 11/26/2025 (i) Expended Federal Awards of $1,000,000 or More The nonprofit must submit the two most recent year-end audited financial statements, profit and loss statements, and balance sheets. The audited financial statements must be provided by the applicant’s Independent Public Accountant (IPA) certifying that the nonprofit: • maintains internal controls over federal awards; • complies with applicable laws, regulations, and contract or grant provisions; and • prepares appropriate financial statements. The nonprofit must also submit the most recent quarterly financial statements along with certification from a Certified Public Accountant (CPA) or other financial professional attesting that the information accurately represents the financial condition of the nonprofit agency. (ii) Expended Federal Awards Less than $1,000,000 Nonprofits must submit two years of audited or unaudited financial statements, prepared in accordance with Generally Accepted Accounting Principles (GAAP) and reporting practices, and must include: • an auditor’s review report, if available; • a treasurer’s report; and • any supplemental schedules. The nonprofit must also submit the most recent quarterly financial statements along with certification from a CPA or other financial professional attesting that the information accurately represents the financial condition of the nonprofit agency. The nonprofit must document and provide proof of the current source of operating funds and the long-term stability of these funding sources, which may include funding from governments, private entities, foundations, or other organizations. There must not be any identity of interest between the capital provider and a nonprofit’s Board of Directors or principal management. (10) Other Business Partners (a) Standard A nonprofit agency must demonstrate that it maintains control over its homeownership program and cannot rely upon a business partner(s) to operate the program for which it seeks FHA approval. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 98 Last Revised: 11/26/2025 (b) Required Documentation The nonprofit must identify other business partners, such as real estate agents, Mortgagees, rehabilitation contractors and consultants providing administrative, financial, and management services. The nonprofit must identify the company by name and list staff with whom the nonprofit will work. The nonprofit must explain the nature and cost of the services and how the nonprofit exercises control over its business partners. (11) Consultant Services (a) Standard The nonprofit’s operations must be independent of the influence, control, or direction of the consultant or any other outside party, particularly those seeking to derive profit or gain from a proposed project (including landowners, real estate brokers, bankers, contractors, builders, or consultants). Consultant services must be provided on an arm’s length basis. Consultant services – administrative, management, financial, or otherwise – provided under an independent contractor relationship (as opposed to an employer-employee relationship) must not constitute more than half of the nonprofit’s activities throughout the duration of the approval period. This measurement will be calculated by evaluating the ratio of nonprofit staff to contracted or consultant staff; the ratio of hours devoted to the implementation of the AHP by nonprofit staff versus contracted or consultant staff; and the funds devoted to paying nonprofit staff compared to those paying contracted or consultant staff. The nonprofit must have the in-house resources and capacity to operate its own programs, and contract for services only on a temporary and supplementary basis. (b) Required Documentation The nonprofit must explain the nature and cost of its consultant services and how the nonprofit exercises control over consultants; describe the work that will be performed by consultants for each program; and provide the percentage of work performed by consultants for each program. The nonprofit must provide a disclosure and supporting documentation related to any agreements with other parties that may derive financial gain through the homeownership program. The disclosure must identify the name of the business entity, the individuals from the company who will be working with the nonprofit, the terms of the relationship, and how the party will be compensated. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 99 Last Revised: 11/26/2025 (12) Acting on Own Behalf Certification The nonprofit must provide a certification signed by an authorized representative of the organization stating the following: I certify that (Name of Nonprofit agency) is acting on its own behalf and is not under the influence, control, or direction of any party seeking to derive a profit or a gain from the proposed project, such as, but not limited to, a landowner, real estate broker, banker, contractor, builder, lender, or consultant. WARNING: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001, 1010, 1012; 31 U.S.C. 3729, 3802). The certification must include the date, and the authorized representative’s printed name, signature, and title. (13) FHA Approval Letter If previously approved by FHA to participate in FHA’s nonprofit programs, the nonprofit must submit a copy of its most recent approval letter. (14) Adequate Facilities (a) Standard Nonprofits are required to have an adequate main office space in a designated physical location where the nonprofit manages its operations, meets with clients, distributes information, and renders services to the public. The nonprofit must not share its office space, general reception area, entrance, or lobby with any entity with whom the nonprofit has a conflict of interest. The office space must be clearly defined for the public and include a permanent and prominently displayed sign. (b) Required Documentation The nonprofit must submit the contact information and physical address of the agency’s main office and submit proof of the physical location. HUD may request additional information, like floor plans, photographs, or billing statements that include the physical address, to confirm the validity of the office space and that it meets requirements. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 100 Last Revised: 11/26/2025 (15) Lending Partner(s) Information (a) Standard A nonprofit must ensure that no conflicts of interest exist. Employees of the Lender cannot receive personal or financial benefit because of the Business Relationship with the nonprofit. (b) Required Documentation The nonprofit must provide the name, address, and contact of any lending institution, bank, or private party that has provided financing to the nonprofit. (16) Affordable Housing Program Plan (a) Definition An Affordable Housing Program Plan (AHPP) refers to an approved plan that is a narrative describing a nonprofit’s plans to implement the Single Family nonprofit program(s) for which it is approved. The AHPP addresses how the nonprofit intends to provide affordable homeownership opportunities for Low- to Moderate-Income buyers by financing, purchasing, rehabilitating, and/or reselling homes to eligible buyers. (b) Standard The nonprofit must submit the AHPP as part of its application for approval. The nonprofit must address the general AHPP requirements and any program- specific AHPP requirements for each program for which it seeks approval. The nonprofit must submit a copy of the AHPP as part of their application to FHA. The nonprofit must adhere to the AHPP during the entire approval period. After approval, if the nonprofit seeks to expand the geographic area where it conducts its program or expand or modify its AHPP, the nonprofit must update the AHPP to include the new geographic area and submit an updated AHPP to the FHA Resource Center at answers@hud.gov with “Revised AHPP” in the subject line for approval. (c) AHPP Requirements The AHPP must address all general AHPP requirements and any program- specific AHPP requirements for each program for which the nonprofit seeks approval. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 101 Last Revised: 11/26/2025 The general AHPP must: • explain how the nonprofit intends to operationalize the program(s) for which it seeks approval; • describe the geographic area and provide the city, county, state, and zip codes where the nonprofit plans to administer its program(s). The program(s) must be operated within the geographic area specified by the AHPP. The AHPP must describe the nonprofit’s ability to execute its program throughout the geographic area in which it plans to operate; • provide an overview of the target population or community needs and challenges of the geographic area in which the nonprofit plans to operate, including the homeownership needs of the community, and describe the demographics of the community, including racial composition, income, and household size; • address how Low- to Moderate-Income individuals and families will benefit from participation in the program and how the nonprofit will locate the Low- to Moderate-Income individuals and families to participate; • explain how the nonprofit will transition Low- to Moderate-Income individuals and families into homeownership; • describe the type of homeownership counseling the nonprofit will provide to prospective homebuyers, if any; and • describe how the nonprofit will serve non-English speaking populations and clients with disabilities. (i) Program-Specific AHPP Requirements for HUD Homes and FHA Mortgagor If the nonprofit is applying for approval for HUD Homes or the FHA Mortgagor program, the nonprofit must also provide in its AHPP: • a general timeline or workflow for purchasing, rehabilitating, and selling properties the nonprofit intends to purchase; • the number of properties the nonprofit expects to purchase under the program; and • a copy of the lease purchase agreement, if applicable, and a description of the program, including how the nonprofit will transition renters to homeowners, how rent will be collected and applied, and if repair reserves will be used to minimize repair costs after purchase. (ii) Program-Specific AHPP Requirements for Secondary Financing If the nonprofit is applying for approval for the Secondary Financing program, the nonprofit must also provide in its AHPP: I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 102 Last Revised: 11/26/2025 • a program overview with a description of the Secondary Financing program, including eligibility requirements, restrictions on transferability and owner occupancy, and equity sharing, if applicable; • a characterization of all fees and amounts charged to the Borrower and whether they will be part of the secondary lien; • the number of secondary financing loans the nonprofit agency expects to provide per year; • a description of how the nonprofit will maintain control and oversight of the servicing of the nonprofit’s loans; and • a description of how the agency will ensure the amount of assistance provided to homebuyers will conform with FHA underwriting guidelines. (iii)Board Resolution The nonprofit must submit a copy of a board resolution that adopts the completed AHPP, including the general AHPP requirements and any program-specific AHPP requirements. This resolution must be signed and dated by the appropriate persons under applicable state law and as identified in the Articles of Organization or other governing documents. (d) Required Documentation The nonprofit must submit a copy of the AHPP. For secondary financing, nonprofits must submit a copy of the agreement between the nonprofit and the servicing entity if the nonprofit plans to use another entity to service the subordinate lien. The nonprofit must submit a copy of the board resolution that adopts the AHPP. (17) Application Certification The nonprofit must include the following certification with the submission of a Complete Nonprofit Application: I/We, the undersigned, certify under penalty of perjury that the information provided above is true and correct. WARNING: Anyone who knowingly submits a false claim or makes a false statement is subject to criminal and/or civil penalties, including confinement for up to 5 years, fines, and civil and administrative penalties. (18 U.S.C. §§ 287, 1001, 1010, 1012, 1014; 31 U.S.C. §§ 3729, 3802). The certification must include the date, and the authorized representative’s printed name, signature, and title. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 103 Last Revised: 11/26/2025 (B) Program-Specific Eligibility Requirements All General Application Requirements apply to participation in any of the three nonprofit programs. Refer to the programs below for additional program-specific requirements. (1) HUD Homes [Text was deleted in this section.] (a) Restrictions on Sale or Lease of Properties FHA strictly prohibits the sale or lease of Properties acquired through the HUD Homes program to any of the nonprofit’s officers, directors, elected or appointed officials, employees, or business associates, either during their tenure or for one year thereafter, or to any individual who is related by blood, marriage, or law to any of the above. (b) Conflicts of Interest No person who is an employee, officer, or elected or appointed official of the nonprofit agency, or who is in a position to participate in a decision making process pursuant to the AHPP or gain inside information with regard to the lease or purchase of the Property pursuant to the AHPP may obtain a personal or financial interest or benefit from the purchase of the Property, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for themselves, or for those with whom they have family or business ties, during their tenure or for one year thereafter. (2) FHA Mortgagor [Text was deleted in this section.] (a) Restrictions on Sale or Lease of Properties FHA strictly prohibits the sale or lease of Properties acquired by the nonprofit with FHA-insured financing to any of the nonprofit’s officers, directors, elected or appointed officials, employees, or business associates, either during their tenure or for one year thereafter, or to any individual who is related by blood, marriage, or law to any of the above. (b) Conflicts of Interest No person who is an employee, officer, or elected or appointed official of the nonprofit agency or who is in a position to participate in a decision making process pursuant to the AHPP or gain inside information with regard to the lease or purchase of the Property pursuant to the AHPP may obtain a personal or financial interest or benefit from the purchase of the Property, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for themselves, or for those with whom they have family or business ties, during their tenure or for one year thereafter. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 104 Last Revised: 11/26/2025 (3) Secondary Financing [Text was deleted in this section.] Restrictions on Conveyance (a) Standard Restrictions on conveyance must comply with the requirements in 24 CFR § 203.41, including that they must automatically terminate if title to the mortgaged Property is transferred by foreclosure or Deed-In-Lieu (DIL) of Foreclosure, or if the Mortgage is assigned to the Secretary. (b) Required Documentation The nonprofit must submit copies of the legal instruments, such as the Mortgage and Note used by, or proposed to be used by, the nonprofit agency when providing secondary financing. Legal instruments with restrictions on conveyance must comply with the requirements in 24 CFR § 203.41. iv. Submitting the Application The nonprofit applicant must submit applications electronically through the HUD Nonprofit Data Management System (NPDMS). NPDMS is an automated web-based system designed to allow for the electronic submission of application, recertification, and reporting documentation. NPDMS collects, stores, and provides web-based access to participant applications and property activity data. After Submitting the Preliminary Information and receiving confirmation of eligibility, the applicant will be provided with login instructions to access NPDMS. FHA will not accept paper applications. The nonprofit must submit a completed application within 30 Days of receiving access to NPDMS. The application date refers to the date that the application package is electronically submitted through NPDMS. v. Processing the Application FHA will review all completed applications for approval to determine whether the nonprofit complies with all eligibility requirements. If FHA requires additional documentation or clarifying information, it may request such additional information and provide the nonprofit with a deadline for response. If the nonprofit does not provide the additional information requested by any specified deadline, FHA may deny approval on this basis. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 105 Last Revised: 11/26/2025 vi. Incomplete Application Nonprofit agencies that submit an incomplete application package will receive a letter indicating the information required to cure the deficiency. This letter will give nonprofit agencies 15 Days from the date on the letter to correct any deficiencies. If the new nonprofit applicant does not satisfy the outstanding requirement in its entirety and within the prescribed deadlines, the approval will be denied and the nonprofit must wait an additional 90 Days before re-applying. vii. Application Approval Nonprofit agencies that are approved for participation will be issued an approval letter from FHA describing which activities the nonprofit is approved for and any limitations associated with that approval. viii. Application Rejection A nonprofit’s application may be rejected due to deficiencies or for failure to submit a program that complies with applicable regulations and requirements of this Handbook 4000.1. Nonprofit agencies that are not approved for participation will be issued a rejection letter from FHA describing the reasons for the application rejection. The nonprofit must wait 90 Days to submit a new application. ix. Recertification (A) Standard (1) Recertification Process To retain FHA approval, nonprofits must complete FHA’s recertification process prior to their two-year approval expiration. Recertification of nonprofit agencies is not automatic. Recertification requires that a nonprofit meet the Complete Nonprofit Application requirements and provide a program activity update. (a) Complete Nonprofit Application Requirements Recertification requires the nonprofit to certify it continues to meet the Complete Nonprofit Application requirements, except for the Relevant Experience requirement. The nonprofit must identify the requirements of the Complete Nonprofit Application that have not changed. For any Complete Nonprofit Application requirements that have changed during the approval period, including but not limited to the Board of Directors, principal management, consultant services, adequate facilities, or lending partners, the nonprofit must identify those I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 106 Last Revised: 11/26/2025 requirements, describe what has changed, and upload the updated information or documentation into the Nonprofit Data Management System (NPDMS). The nonprofit must provide updated Financial Capacity documentation at recertification. (b) Program Activity The nonprofit must provide information about the nonprofit’s activity in the nonprofit programs for which it was approved, during the approval period. Nonprofits must demonstrate that they have created affordable housing opportunities. Nonprofits must demonstrate that they met the following standards, if applicable, during the approval period: • ability to meet the goal of expanding affordable housing opportunities for Low- to Moderate-Income individuals and families; • compliance with the program requirements for each program the nonprofit is approved to participate in; and • adherence to the AHPP for the programs in which the nonprofit participates. The nonprofit must submit information about its program activity, for each program it participates in, during the approval period. The nonprofit must provide the specific program activity information as set forth below: Program Activity Required Information HUD Homes • Property address • FHA case number (on acquisition) • Date of acquisition • Loan type • Purchase price • Mortgage amount • Name of Mortgagee • Discount amount • Net Development Costs (NDC) • Sold to Low- to Moderate- Income individual or family (yes or no) • Resale price • Resale date FHA Mortgagor • Case number • Mortgage amount • Settlement date • Loan type I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 107 Last Revised: 11/26/2025 • If 203(k), date of rehabilitation completion • Name of Mortgagee • Is the loan part of a lease purchase program (yes or no) • If so, have renters become homeowners under the terms of the agreement (yes or no) • Sales price if property resold • Sale to a Low- to Moderate- Income individual or family (yes or no) • Was the loan assumed (yes or no) • Delinquency date • Foreclosure date Secondary Financing • Property address • First lien mortgage amount • Second lien mortgage amount • Date of origination • Name of Mortgagee • Forgivable (yes or no) • Delinquency date • Foreclosure date (c) Recertification Certification The nonprofit must include the following certification with the submission of the recertification package: I/We, the undersigned, certify under penalty of perjury that the information provided above is true and correct. WARNING: Anyone who knowingly submits a false claim or makes a false statement is subject to criminal and/or civil penalties, including confinement for up to 5 years, fines, and civil and administrative penalties. (18 U.S.C. §§ 287, 1001, 1010, 1012, 1014; 31 U.S.C. §§ 3729, 3802). The certification must include the date, and the authorized representative’s printed name, signature, and title. (2) Filing Deadline The required documentation must be submitted to the FHA Resource Center at answers@hud.gov at least 90 Days prior to the end of the approval period. FHA I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 108 Last Revised: 11/26/2025 must be notified of any changes that impact the recertification application after it has been submitted. (B) Required Documentation The recertification process requires a nonprofit to identify requirements of the Complete Nonprofit Application that have not changed. For any Complete Nonprofit Application requirements that have changed during the approval period, the nonprofit must identify those requirements, describe what has changed, and upload the updated information or documentation into the Nonprofit Data Management System (NPDMS). To assist in identifying requirements that have not changed, as well as those that have, nonprofits may use, but are not required to use, the FHA Nonprofit Recertification Checklist. Nonprofits must submit program activity data in NPDMS. Nonprofits may use, but are not required to use, the FHA Nonprofit Activity Workbook. (C) Incomplete Recertification Application Nonprofit agencies that submit incomplete recertification applications will receive a letter indicating the information required to cure the deficiency. This letter will give nonprofit agencies 15 Days from the date on the letter to correct any deficiencies. If the nonprofit applicant does not satisfy the outstanding requirement in its entirety and within the prescribed deadlines, the approval for recertification will be denied. If the nonprofit does not submit an acceptable recertification application before the expiration of the two-year approval period, the nonprofit will be removed from the HUD Nonprofit Roster. (D) Failure to Recertify Failure to recertify will result in the nonprofit’s removal from the program and the HUD Nonprofit Roster. The nonprofit must comply with all program requirements for any program activity that was not finalized at the time of removal. (E) Recertification Application Approval Nonprofit agencies that are recertified for participation will be issued an approval letter from FHA describing which activities the nonprofit is approved for and any limitations associated with that approval. An approval is valid for a two-year period. I. DOING BUSINESS WITH FHA B. Other Participants 4. Nonprofits and Governmental Entities Handbook 4000.1 109 Last Revised: 11/26/2025 (F) Recertification Application Rejection A nonprofit’s recertification application may be rejected due to deficiencies or for failure to submit a program that complies with applicable regulations and requirements of this Handbook 4000.1. Nonprofit agencies that are not approved for recertification will be issued a rejection letter from FHA describing the reasons for the rejection of the recertification application and will be removed from the HUD Nonprofit Roster.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part I — b. Application and Approval Process (07/14/2025) · source URL · snapshot 8c03836f77f317e1